RFE/RL NEWSLINE Vol. 2, No. 133 Part I, 14 July 1998

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RFE/RL NEWSLINE Vol. 2, No. 133 Part I, 14 July 1998
A daily report of developments in Eastern and Southeastern
Europe, Russia, the Caucasus and Central Asia prepared by
the staff of Radio Free Europe/Radio Liberty.
This is Part I, a compilation of news concerning Russia,
Transcaucasia and Central Asia. Part II covers Central,
Eastern, and Southeastern Europe and is distributed
simultaneously as a second document. Back issues of RFE/RL
Newsline and the OMRI Daily Digest are online at RFE/RL's
Web site: http://www.rferl.org/newsline
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Headlines, Part I
* RUSSIA TO RECEIVE $14.8 BILLION PACKAGE THIS YEAR
* RUSSIA SEEKS TO ISSUE EUROBONDS INSTEAD OF TREASURY BILLS
* UN, ABKHAZIA CONDEMN ATTACK ON RUSSIAN PEACEKEEPERS
End Note: THE CORRUPTION OF POWER
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RUSSIA
RUSSIA TO RECEIVE $14.8 BILLION PACKAGE THIS YEAR. Russia
will receive $14.8 billion in loans from the IMF, World
Bank, and Japan this year, officials announced on 13 July.
The IMF will loan Russia $12.5 billion in 1998, the bulk of
which ($11.2 billion) will constitute a new stabilization
loan. The first disbursement of $5.6 billion may occur soon
after a 20 July meeting of the IMF's board of directors. The
World Bank will extend $1.7 billion in loans to Russia this
year, $800 million of which was agreed during the past two
weeks. Japan has also agreed to loan Russia $600 million
this year. The stabilization package also includes a
combined $7.8 billion in loans to Russia from the IMF, World
Bank, and Japan next year. Of that figure, $4.5 billion are
new credits agreed during the last two weeks. LB
RUSSIA SEEKS TO ISSUE EUROBONDS INSTEAD OF TREASURY BILLS...
In an effort to reduce short-term borrowing costs, Russia
will offer holders of government treasury bills (GKOs)
maturing before 1 July 1999 a chance to exchange those
securities for seven-year or 20-year Eurobonds denominated
in dollars, Russian news agencies reported on 14 July.
According to Interfax, the value of GKOs in circulation
totals some $30 billion. John Odling-Smee, head of the IMF's
second European department, predicted on 13 July that the
planned voluntary swap will reduce Russia's debt servicing
costs and relieve the pressure on the GKO market. Widespread
fears of a ruble devaluation have sparked a massive sell-off
of GKOs and other ruble-denominated securities during the
last two months. But the Russian stock market increased by
more than 9 percent on 13 July, while in early trading the
next day, the stock and bond markets posted gains of more
than 13 percent and 10 percent, respectively. LB
...AND EXTEND COOPERATION WITH IMF INTO NEXT CENTURY. The
Russian government has informed the IMF that it will seek
another Extended Fund Facility for the period 1999-2001,
ITAR-TASS reported on 13 July. Before the Russian stock and
bond markets began showing steep declines in fall 1997,
President Boris Yeltsin and other Russian officials
repeatedly said Russia will not seek any new loans from the
IMF after the current four-year, $10 billion Extended Fund
Facility expires in 2000 (see "RFE/RL Newsline," 18
September 1997). LB
CHUBAIS DISMISSES FURTHER THREAT OF DEVALUATION. Unified
Energy System head Anatolii Chubais, Russia's top negotiator
with international financial institutions, announced during
a 13 July press conference that "there is no need for a
devaluation" of the ruble, RFE/RL's Moscow bureau reported.
He said the new loan agreements "signify a restoration of
faith in Russia's ability to overcome its difficulties,"
Reuters reported. Central Bank Chairman Sergei Dubinin told
journalists on 14 July that the first $5.6 billion
installment of the new IMF loan will be added to the Central
Bank's gold and hard-currency reserves, ITAR-TASS reported.
Those reserves dropped from $15.1 billion to $13.5 billion
from 3-14 July. LB
NEWSPAPER DOUBTS NEW LOANS WILL PREVENT DEVALUATION.
"Nezavisimaya gazeta" on 14 July expressed doubt that the
new foreign loans will eliminate the need for a devaluation.
A front-page article in that newspaper, which is financed by
CIS Executive Secretary Boris Berezovskii, declared that
Russia has received merely a "delay of the death penalty,"
adding that the new loans will significantly increase
Russia's debt load and "lead to the dollarization of the
economy." LB
YELTSIN PRESSES DUMA TO PASS ANTI-CRISIS PROGRAM... Yeltsin
met with State Duma Speaker Gennadii Seleznev and
representatives from all seven Duma factions on 14 July to
lobby for the passage of laws contained in the government's
anti-crisis program, Russian media reported. He told
parliamentary deputies that "we will not be able to
implement [the program] if you do not confirm it... I can
decide on some matters myself but, on the whole, the destiny
of the program depends on you." The program formed the basis
for Russia's recent negotiations with international
financial institutions. The Duma will consider many of the
government's proposals during an extraordinary session on
15-16 July. It has already rejected some key proposals for
increasing budget revenues (see "RFE/RL Newsline," 3 and 7
July 1998). LB
...RULES OUT NEW ELECTIONS, COUPS, CONSTITUTIONAL
AMENDMENTS. Yeltsin told influential Duma officials on 14
July that "there will be no extraordinary elections, no
coups, no dissolution of the Duma and no changes in the
constitution," ITAR-TASS reported, quoting presidential
spokesman Sergei Yastrzhembskii. During the Kremlin meeting,
Yeltsin also argued that the executive and legislature form
"one team," adding that "we are one state." The president
recently announced that law enforcement agencies are strong
enough to reject any coup attempt (see "RFE/RL Newsline," 13
July 1998). Those remarks appear to have been prompted by an
article in "Nezavisimaya gazeta" proposing the creation of a
Temporary State Council to govern Russia and call early
presidential and parliamentary elections. Several proposed
constitutional amendments are being drafted in the Duma and
are tentatively scheduled for consideration this fall,
"Nezavisimaya gazeta" reported on 11 July. LB
SARATOV GOVERNOR SUGGESTS YELTSIN MAY BE FORCED OUT. Dmitrii
Ayatskov has predicted that "surges of discontent" from
throughout Russia may force Yeltsin and the government to
resign by September. Speaking to Interfax on 13 July,
Ayatskov called on Yeltsin to "admit that he made a mistake"
with Prime Minister Sergei Kirienko's cabinet. The Saratov
governor criticized the government's economic and regional
policies, adding that it would be "naive" to expect the
government to solve the problem of wage and pension arrears.
Ayatskov also said early parliamentary and presidential
elections would not be a "tragedy," and he argued in favor
of having "more people in government with social democratic
tendencies, such as [Moscow Mayor Yurii] Luzhkov and
Ayatskov." The Saratov governor was a Yeltsin appointee in
1996 and won an election that year to retain the post. Since
then, relations between the two men have been good (see
"RFE/RL Newsline," 27 August 1997 and 18 May 1998). LB
NOVGOROD GOVERNOR URGES YELTSIN TO BACK CONSTITUTIONAL
CHANGES. Mikhail Prusak has called on Yeltsin to support
amending Russia's constitution, "Nezavisimaya gazeta"
reported on 11 July. Prusak made the appeal during the
Federation Council's session on 9 July. The same day, he met
with Yeltsin and suggested "taking economic functions away
from the president" and giving them to the government,
Interfax reported. Prusak also called for reinstating the
post of vice president. The Novgorod governor has repeatedly
spoken out in favor of amending the constitution and
changing Russia's electoral system (see "RFE/RL Newsline,"
26 May 1998). Like Ayatskov, he initially became governor as
a presidential appointee and has been a loyal supporter of
Yeltsin. But Prusak recently blasted the Kirienko
government, which, he claimed, is inexperienced and lacks
the trust of the regions, according to the 2 July edition of
the "IEWS Russian Regional Report." LB
MINERS REJECT TULEEV'S APPEAL. The blockade of the Trans-
Siberian Railroad in Kemerovo Oblast continues, despite
Governor Aman Tuleev's appeal to protesting miners on 13
July to allow the transport of materials needed by regional
industries, news agencies reported. Tuleev told a meeting of
the Kemerovo administration that a government commission
will fly to Kemerovo "an hour after the blockade has been
lifted," referring to Deputy Prime Minister Oleg Sysuev's
offer to negotiate with the protesters if the railroad is
opened and miners' political demands are not discussed.
Tuleev said a train that is loaded with enriched uranium and
bound for a nuclear power plant in Seversk Oblast has for
several days remained close to where miners are blocking the
railroad. He added that the train poses a major
environmental threat. The blockade of the Novokuznetsk-
Tashtagol railroad, one of three such blockades in Kemerovo
Oblast, was lifted on 13 July, after the mayor of Osinniki
told the pickets that Tashtagol was on the verge of
rationing food, Interfax reported. BT
KIRIENKO WRAPS UP JAPANESE VISIT. Before departing for China
on 14 July, Russian Prime Minister Sergei Kirienko met with
Japanese businessmen in Tokyo, ITAR-TASS reported. Kirienko
offered the businessmen the opportunity to participate in
several projects in Russia, in particular the Kovyktinskii
gas-condensate field in Irkutsk. Kirienko also said his
government is ready to establish "special regimes for
economic activities in Russia's Far East," including
projects on the Kuril Islands. Kirienko said the
introduction of such "regimes" could facilitate an
understanding on "as yet unresolved issues." With regard to
the $400 million credit Japan's Eximbank is expected to
extend to Russia by 16 July under an agreement reached
earlier this year, Kirienko said the money will be used to
"settle the problems of the Russian coal mining industry."
The previous day, after meeting with Foreign Minister Keidzo
Obuchi, Kirienko met briefly with outgoing Prime Minister
Ryutaro Hashimoto and was received by Emperor Akihito. BP
CYPRIOT PRESIDENT IN MOSCOW. Glafcos Clerides, who is
visiting Moscow at the invitation of Mayor Yurii Luzhkov to
attend the World Youth Games, held "friendly" talks on 13
July with President Yeltsin and Foreign Minister Yevgenii
Primakov, Russian agencies reported. The talks focused on
bilateral relations, in particular boosting economic
cooperation. The two presidents confirmed that the
controversial sale of Russian S-300 air defense missiles to
Cyprus will go ahead, but they did not discuss the
anticipated postponement of the delivery of those weapons,
Yeltsin's aide Sergei Prikhodko told journalists later.
Yeltsin and Clerides also expressed satisfaction that their
views on the outlook for and possible ways of resolving the
Cyprus issues coincide completely. Clerides told journalists
on 14 July, however, that Nicosia would consider canceling
the deployment of the S-300s if peace talks with the Turkish
Cypriot community begin immediately and the island is
demilitarized, dpa reported. LF
DOG FOOD DISCOVERED AT MILITARY FOOD DEPOT. Military
prosecutors have discovered more than1,000 tons of dog food
and large amounts of products purchased after their
expiration date at a military food depot near Moscow,
"Kommersant-Daily" reported on 10 July. Criminal charges
have been filed against two officials at the depot, and the
head of the Defense Ministry's food service has resigned.
The Military Prosecutor's Office said it will inspect all
major military food depots by the end of the year.
Meanwhile, businessman Yurii Lysenko has been charged with
taking bribes worth $3.05 million in 1996, ITAR-TASS
reported on 13 July. At the time, he was deputy director-
general of the Federal Food Corporation, an Agriculture
Ministry agency that buys food for a state reserve supplying
the armed forces. BT
TWO OIL COMPANIES FACE REDUCTIONS IN EXPORT QUOTAS. The
government has trimmed the number of oil companies that will
be allowed to export less oil because of persistent tax
arrears, Deputy Prime Minister Viktor Khristenko told
journalists on 10 July. The measure will now affect only
Onako and Vareganneft (a subsidiary of Oneksimbank-
controlled Sidanko), Russian news agencies reported. The
government initially planned to reduce the oil export quotas
of five companies (see "RFE/RL Newsline," 25 June and1 July
1998). The Tyumen Oil Company was the first to be dropped
from the list. According to the "Moscow Times" on 27 June,
that company has used oil exports to secure foreign loans,
and such firms are exempt from the government directive on
export reductions. The government reduced the export quotas
for Tatneft and Bashneft but restored them after the
companies agreed on a payment schedule with the tax
authorities. LB
ONLY ONE-FIFTH OF SOLDIERS LIVE ON THEIR PAY. In a survey of
1,500 officers in western Russia published in "Izvestiya" on
14 July, more than half said their families rely either
wholly or party on secondary activities, such as
construction and pawning, to survive. Some 15 percent said
they rely on the earnings of family members and relatives,
while only 18.5 percent said they live on their pay alone.
However, 55.1 percent said they plan to continue serving in
the military. BT
CHECHEN PRESIDENT ASSESSES ANTI-CRIME CAMPAIGN RESULTS.
Aslan Maskhadov told journalists in Grozny on13 July that
anti-crime measures implemented three weeks earlier have
resulted in the closing down of hundreds of small-scale
illegal oil refineries, the release of 18 hostages, as well
the arrest of 112 people for serious crimes and 64 for drug-
related offenses, ITAR-TASS reported. As a result, Maskhadov
said he will not prolong the state of emergency imposed on
23 June after its expires on 15 July. Maskhadov has
nonetheless decided to restructure and streamline Chechnya's
numerous law enforcement and security bodies, his press
spokesman Mairbek Vachagaev told Interfax. The anti-
terrorism center is to be abolished and the National
Security Service reorganized, according to RFE/RL's
correspondent in the Chechen capital. That service has been
in crisis since its commander, Lecha Khultygov, was shot
dead last month. LF
POLICE DETAIN ANOTHER KURSK OFFICIAL. The Kursk Oblast
branch of the Interior Ministry has arrested Aleksandr
Lukyanchikov, the deputy chairman of the oblast
administration's Agriculture Committee, ITAR-TASS reported
on 13 July. He is suspected of embezzling goods worth more
than 50,000 rubles ($8,000). Last month, Kursk Oblast
Prosecutor Nikolai Tkachev filed criminal charges against
two deputies of Governor Aleksandr Rutskoi. They are accused
of involvement in schemes to embezzle some 11 million rubles
(see "RFE/RL Newsline," 17 June 1998). Tkachev has also
filed corruption charges against the governor's brother,
Mikhail Rutskoi, who was recently sacked as head of the
oblast branch of the Interior Ministry. Governor Rutskoi has
tried several avenues to secure Tkachev's removal, so far
without success. LB
TRANSCAUCASUS AND CENTRAL ASIA
UN, ABKHAZIA CONDEMN ATTACK ON RUSSIAN PEACEKEEPERS... The
UN Security Council issued a statement on 13 July condemning
the deaths the previous day of five members of the Russian
peacekeeping force deployed under CIS auspices on the border
between Abkhazia and the rest of Georgia, ITAR-TASS
reported. The five peacekeepers died when their vehicle ran
over a land mine in Abkhazia's Gali Raion. Abkhaz Foreign
Minister Sergei Shamba told Interfax that he is convinced
the attack was carried out by Georgian guerrillas with the
aim of destabilizing the situation. Shamba claimed that
"certain forces" within the Georgian leadership are intent
on preventing the planned meeting between the Georgian and
Abkhaz presidents. Documents on the repatriation of Georgian
fugitives to Abkhazia's Gali Raion are to be signed at that
meeting. LF
...WHILE GEORGIA DENIES RESPONSIBILITY. Georgian
Intelligence chief Avtandil Ioseliani told Caucasus Press on
13 July that there is no evidence that Georgian guerrillas
laid the mine. The Georgian Foreign Ministry has issued a
statement expressing condolences and concern lest the
incident lead to a new deadlock in the peace process. LF
AZERBAIJANI OPPOSITION LAYS DOWN CONDITIONS FOR PRESIDENTIAL
POLL. Former President Abulfaz Elchibey told Turan on 13
July that opposition candidates will contend the 11 October
presidential elections only if certain conditions are met.
Those conditions include parity in the composition of the
Central Electoral Commission, "the democratization of the
pre-election situation," the release of all political
prisoners, the abolition of censorship, and the suspension
of criminal proceedings against former parliamentary speaker
Rasul Guliev and Musavat Party chairman Isa Gambar. Two days
earlier, the United Communist Party of Azerbaijan voted to
propose its secretary-general, Sayad Sayadov, as a candidate
for the presidential poll, Turan reported. LF
AZERBAIJANI OPPOSITIONIST CALLS FOR CRIMINAL PROCEEDINGS
AGAINST ALIEV. Rasul Guliev has addressed a 20-page
statement to the Azerbaijani Prosecutor-General calling for
President Heidar Aliev to be charged with crimes against the
Azerbaijani nation and state, Turan reported. Guliev claimed
that Aliev inflicted irretrievable damage on the country's
armed forces, which, he said, led to the occupation of six
Azerbaijani raions by Karabakh Armenian forces. Guliev also
repeated the claim he made in a recent interview with
"Moskovskie novosti" that Aliev and his family have
misappropriated hundreds of millions of dollars. LF
FIGHTING STOPS EAST OF TAJIK CAPITAL. Fighting between two
armed groups from the United Tajik Opposition has ceased in
the Kofarnikhon region, 30 kilometers east of Dushanbe,
following the death of more than 20 people, ITAR-TASS and
Interfax reported. The clash began on 12 July between
followers of field commanders Nozim Yunusov and Mullo Kasym
Ismati, who are reported to have been at odds for some time.
Yunusov and 12 of his followers were killed in the battle,
but casualty figures for Ismati's followers and for
civilians vary, with some reports saying that neither group
suffered any casualties. The fighting ceased after mediation
by Tajik Deputy Prime Minister Khoja Akbar Turajonzoda. BP
TALIBAN WARN TAJIKISTAN, UZBEKISTAN. The leader of
Afghanistan's Taliban Movement, Mulla Mohammad Omar, has
warned both Tajikistan and Uzbekistan not to allow anti-
Taliban coalition forces to use bases in their countries,
ITAR-TASS reported on 14 July. The Taliban have reportedly
captured most of Afghanistan's northern Faryab Province
during the past week. As a result, Taliban troops are moving
closer to the borders of Turkmenistan and Uzbekistan. BP
AUSTERITY MEASURES TO BE INTRODUCED IN KAZAKHSTAN. The
Kazakh government is preparing to introduce austerity
measures to stabilize the economic situation, Interfax and
Reuters reported on 13 July. A memorandum adopted the
previous day cites the economic crisis in Asia and the
decrease in the prices of oil and metals, Kazakhstan's two
major exports, as the reasons for the move. The measures
will include cuts in personnel working for state
organizations, which are expected to affect 10,000 people.
Use of electricity, heating, and communications equipment at
those organizations will be regulated, while regional
governors and heads of state organizations will be held
personally responsible for debts to the budget. Contracts
with foreign companies are to be revised, and those that
have been breached will be annulled. BP
PRODUCTION-SHARING AGREEMENT SIGNED IN TURKMENISTAN.
Representatives of the Turkmen government and a Western
consortium composed of the U.S. company Mobil and British
company Monument signed an agreement on 10 July to develop
the Garashsyzlyk oil field in western Turkmenistan, Interfax
and ITAR-TASS reported. The field has estimated oil reserves
of 100-300 million metric tons but has been subject to only
limited exploration, prompting speculation that those
reserves may be larger. Mobil has a 52.4 percent stake,
Monument 27.6 percent, and the state-owned company
Turkmenneft 20 percent. BP
END NOTE
THE CORRUPTION OF POWER
by Paul Goble
Corruption now threatens the authority and even power
of many governments in the post-Soviet states. But the way
some of those governments seek to combat it could undermine
chances for a transition to democracy.
At least a few leaders in the region appear to be
using anti-corruption campaigns in the way their Soviet
predecessors did: to punish opponents, to strengthen the
security forces, and to consolidate their personal power
rather than to root out corruption.
That may now be happening in Kazakhstan.
On 10 July, Kazakh President Nursultan Nazarbayev told
an extraordinary meeting of his Security Council in Astana
that "the most important thing" is to seek to fight
corruption in order to "show our people we can improve our
image and change their view of us."
Nazarbayev warned that he and his security agencies
would hold everyone accountable, including cabinet
ministers. And he promised to make a nationwide address in
which he would tell "all my friends and people with whom I
once worked that there will be no exceptions for anyone."
But despite what appears to be Nazarbayev's plan to
give sweeping new powers to his security agencies, the
Kazakhstan leader added somewhat defensively that "I am
talking not about repression but about regaining trust in
the state power structures."
While corruption has long been a problem in
Kazakhstan, Nazarbayev may have been prompted to make this
announcement because of an increasingly well-organized
protest movement against himself and his government.
In recent weeks, some 21,000 Kazakhs in five cities
throughout the country have signed a petition demanding that
Nazarbayev take action not only to improve economic
conditions in the republic but to force the law enforcement
agencies to do their jobs. If he fails to do so, the
petition says, those who have signed it will force
Nazarbayev "to leave the post of the head of the Kazakh
state."
The signatories almost certainly lack the ability to
carry out that threat. Not only do polls suggest that
Nazarbayev retains support from most people in Kazakhstan,
but the president's power base in the country's security
agencies seems unquestioned.
Nonetheless, the Kazakh leader is sufficiently
concerned about popular unhappiness with his regime and
himself as well as about the image of his country abroad
that he has decided to launch an anti-corruption campaign.
While many in Kazakhstan and elsewhere are likely to
welcome efforts to crack down on corruption, there are three
reasons to be concerned about Nazarbayev's plans.
First, whatever the Kazakh president says, his
campaign almost certainly will be highly selective. Not only
are many of his most senior officials widely thought to be
involved in corruption, but each has built up his power base
by protecting more junior officials.
At the 10 July meeting, Nazarbayev's security chief
Alnur Musayev complained openly that senior officials had
blocked prosecutions against their subordinates and that
many judges had refused to open criminal probes against
their colleagues, regardless of the evidence his agency had
collected against them. Thus, a sweeping attack against
corruption could have the effect of undermining the
political structures of the state itself.
That scenario is made even more likely by the second
reason for concern. Precisely because the law enforcement
agencies and the courts are so thoroughly corrupt,
Nazarbayev clearly plans to use the what he calls "the state
power structures" to combat corruption.
In addition to the National Security Committee, the
successor to the Soviet-era KGB in Kazakhstan, Nazarbayev
indicated that he would use a special presidential Supreme
Disciplinary Committee to examine cases of corruption. While
those measures may appear justified by the extent of the
problem, the strengthening of such extra-judicial agencies
may give Nazarbayev even more unregulated personal power
over the state and society. That, in itself, could
constitute yet another obstacle on Kazakhstan's path to
democracy.
Finally, the third reason to be concerned is that
Nazarbayev's announcement suggests his efforts at fighting
corruption will be a campaign like any other rather than a
turning point in the way Kazakhstan deals with a problem
that can threaten any country. In such a case, the campaign
will be announced with much fanfare and will gradually be
forgotten as the country moves on to other issues. And that
pattern will both increase public cynicism and allow those
dealing in corruption to continue to do so after only a
short interval of "good government."
Kazakhstan is far from the only country where this
problem exists and this logic applies. The 9 July
"Nezavisimaya gazeta," for example, commented that
corruption in Georgia has reached such a level that the
World Bank commissioned a special study on how it might be
overcome. That move comes, despite Georgian President Eduard
Shevardnadze's earlier declaration that his government will
make a breakthrough against corruption this year.
If Kazakhstan and the other countries in this region
genuinely want to overcome corruption, they will need to
change public and official attitudes toward it. And they
will have to create institutions to ensure that all who
violate the rules are punished. However well-publicized, a
single campaign against corruption won't do that. In fact
such a campaign may become a substitute for the kind of
changes that are really needed.
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